GUS edges closer to break-up with float of South Africa arm

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The Independent Online

GUS set the clock ticking yesterday on its plans to float part of its South African retail arm. The company, which owns Argos, is forging ahead with a strategic review that analysts believe could presage an eventual break up of the retail-to-financial services conglomerate.

GUS set the clock ticking yesterday on its plans to float part of its South African retail arm. The company, which owns Argos, is forging ahead with a strategic review that analysts believe could presage an eventual break up of the retail-to-financial services conglomerate.

The group said it planned to float Lewis, which has more than 450 outlets, in early October on the Johannesburg stock exchange. Analysts estimated the group was worth between £150m and £250m. John Peace, GUS's chief executive, said: "The plan to float part of the Lewis group is another important step in reshaping the GUS portfolio, by focusing it on fewer activities." GUS shares closed up 2.5p at 849p.

The move comes two years after GUS spun off a minority stake in Burberry, the luxury goods retailer. It also follows the sales of its home shopping businesses for £590m. GUS is widely expected to retain a majority stake in Lewis, which has stores across South Africa, Lesotho, Namibia, Botswana and Swaziland. The listing is expected to take the shape of a domestic offer in South Africa, with a tranche made available to institutional investors outside of South Africa. UBS is handling the bookrunning while Cazenove and Investec are acting as co-lead managers, GUS said. Full details of the offer will be unveiled in the prospectus, due to be published next month.

The group is expected to put the proceeds from the flotation towards its £200m share buyback programme - its first in nearly a decade - unveiled earlier this year. It said yesterday that the listing would enable the company to "release value for its shareholders", while providing the Lewis group with a springboard for growth.

GUS bought the South African group in 1946, when it comprised just eight stores. These days Lewis, which made annual operating profits of £43.5m on sales of £160m last year, sells furniture, household and electrical goods, mainly on credit, employing 5,700 people.

Analysts have long called for GUS to dispose or spin off some of its more disparate interests, which span Experian, a global financial and marketing services business, and Argos, the perennially popular retailer. Experian, which is worth up to £4bn, is expected to be the next target for a flotation, although Mr Peace is adamant that no decision will be taken until the strategic review is complete.

GUS will be free to sell down more of its 66 per cent stake in Burberry from November, should it wish to raise cash to expand its UK retail operations. It is investing heavily on developing Homebase, the home improvements group it acquired from Permira at the end of 2002.

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